What Just Happened? Why Stock Market Panics Come Out of the Blue — and What to Expect Now

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After the Terrifying Panic on Wall Street, Investors Are Bewildered and Scared. For Tips on How to Cope, Read "Panics and Bears" by Peter Brock, Founder of The Investor’s Bodyguard.

Stock market panics make history and give investors nightmares. To help people do the right thing at the right time, Peter Brock has published "Panics and Bears", a guide that explains panics and what they mean.

You only have to say a year, like 1929 or 1987, to make investors feel nervous. Now you can add 2010. What happened on May 6 is another in a long line of stock market panics — brutal sell-offs that start without warning and shock investors all over the world with their speed and ferocity.

Here are four key points from "Panics and Bears":

1. Stock market panics can happen anytime, and are triggered by news. They start suddenly and quickly override all logic.

2. In a rush for the exits, buyers and market makers are trampled by wave after wave of frightened sellers.

3. A panic is to a bear market as a blizzard is to an ice age. Panics end with a bang and the market usually rebounds after the plunge.

4. Once a panic starts, it’s wise not to react. Don’t sell into a panic. Instead, prepare for the reflexive bounce that always follows a panic.

"Panics and Bears" was originally a chapter of The Investor’s Bodyguard Companion Guide, and is now a free download from http://investorsbodyguard.com

The Investor’s Bodyguard provides stock market strategy and tools like Brock Value, a valuation indicator, and the Four Phases, a market timing gauge. The Investor’s Bodyguard helps investors improve their results by calling the major and minor turns of the Standard & Poor’s 500 Index.

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